Blockchain-based vehicle history databases

The market for used cars suffers from information asymmetry; sellers usually know more about their cars than buyers. On the one side, this leads to fraud because sellers might not disclose all the relevant information to buyers. On the other side, it erases trust and in the long-run, only bad cars remain on the market. This so-called “Lemons Problem“ leads to only bad cars – „lemons“ – being sold on the used car market because buyers and sellers do not trust each other.

Selling lemons (Photo by Kevin Bluer on Unsplash)

Vehicle history databases that store vehicle lifecycle related data such as repair records, accident history, and mileage are combating these problems. There are non-blockchain based car databases such as Carfax. However, blockchain-based alternatives could introduce a range of useful features into the market of vehicle history databases.

VinChain is creating a worldwide blockchain database of used vehicle information that is 100% transparent, reliable, and accessible by everyone. The VinChain project unites all data providers and gives the…

Build a permissionless, self-sustaining, and, semi rent-free public good

By relying on blockchain-related design patterns such as decentralized governance or token-curated registries, blockchain-based vehicle history databases can be created so that they are permissionless, self-sustaining, and semi rent-free.

Permissionless: There are little restrictions to who can participate.

Self-sustaining: Self-sustaining means that blockchain-based vehicle databases work even without the initial creators.

Semi rent-free

Current vehicle databases such as Carfax collect all the payments for data that they have not created themselves. Vehicle owners generate the data, Carfax parses it and charges fees for access to their reports. In contrast, decentralized vehicle databases could be designed so that fees are more evenly distributed; payments would not be accumulated only by the creators but distributed across all participants.

There are three participants in decentralized vehicle databases:

Contributors: Those users that submit vehicle data. Car owners are one type of contributors. In general, contributors can submit data manually or allow it to happen automatically by using data logging solutions such as the blockchain-based XAIN.

Consumers: Those people that consume/use vehicle data in, for instance, reports.

Validators: They validate whether the data which the contributors have added is valid. Mechanics are one group of validators.

Developers and managers: Those participants that maintain the network.

Based on these participants a system can be created where fees („rents“) still flow but are more evenly distributed; consumers pay for access, contributors are rewarded for submissions, validators for verifications, and developers and managers are rewarded for maintenance.

VinChain is creating a worldwide blockchain database of used vehicle information that is 100% transparent, reliable, and accessible by everyone. The VinChain project unites all data providers and gives the…